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Chairman of DPD RI Supports Regional Bonds, But It Must Be Strict and Measured

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SURABAYA – As an alternative to financing in the regions, the policy of issuing regional bonds that has almost been completed by the government as a follow-up to Law Number 1 Year 2022 concerning Financial Relations between the Centre and the Regions has the support of the Chairman of Indonesian Regional Representative Council (DPD RI) AA LaNyalla Mahmud Mattalitti.

However, he reminded that the issuance of regional debt securities must be strict and measurable.

He asked the Ministry of Finance and the Financial Services Authority (OJK) to provide strict corridors and signs.

Do not let the region’s great desire to issue debt securities, he said, become a regional fiscal catastrophe as has happened in several countries.

“As an alternative financing, I think it is good. Because this financing comes from domestic idle money. As well as changing people’s behavior from a savings-oriented society to an investment-oriented society. But it must be strict and measured. It cannot be seen evenly, because not all regional governments have the same fiscal strength,” he said on Friday (19/4).

LaNyalla added, what must be strictly measured is whether the project to be built with the issuance of debt securities has a qualified return of investment.

This is because most projects that will be funded through these bonds are not in demand by direct investors.

“Don’t let it be paradoxical. Because it is not in demand through the direct investor scheme, it is financed through the issuance of debt securities. It raises questions. Because direct investors must calculate before deciding to invest. So it must be measured too,” said the former Chairman of KADIN East Java.

The next issue that must be taken seriously is the ability of regions in the fiscal sector and human resources to manage public funds that can reach trillions of rupiah.

“Moreover, if we look at the data in BPK, there are still many regions that have records and problems in the financial governance sector. Not to mention the issue of moral hazard and corrupt behavior,” he added.

LaNyalla also reminded that these things should not lead to default.

It is because there are already several examples of regional governments in China and in states in the United States that have experienced regional bond defaults.

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